Agile startups race ahead in the art of deal making

16th Jul 2018
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Startups, IT and ITES and manufacturing attracted overseas investors’ attention witnessing increased deal activity, contributing to 56 percent of total inbound deal volumes.

If business is all about making deals, then Startup India has stood out in the crowd. In the first half of 2018, startups was at the top of the table in terms of making deals, according to a recent half-yearly report titled, “Providing M&A and Private Equity Deal insights”, prepared by Grant Thornton.

The report said that sectors like startups, IT and ITES and manufacturing attracted overseas investors’ attention witnessing increased deal activity, contributing to 56 percent of total inbound deal volumes, while ecommerce and manufacturing attracted large ticket investments.

Startups race ahead in the art of deal making

As far as mergers and acquisitions are concerned, “start-ups led the deal volumes, with 53 driven by revived domestic investors’ interest in the fintech segment followed by the discovery platform space”. These deals amounted to $287 million in total during the first half of 2018. The ecommerce sector saw 11 deals leading to a deal value of $16,316 million.

Sumeet Abrol, Partner, Grant Thornton India LLP, said, “The mega deal making was marked by Walmart's $16 billion acquisition of Flipkart and Bharti Infratel's $14.6 billion merger with Indus Towers. Walmart's late stage buyout of Flipkart underscores visible maturity in the ecommerce ecosystem and is expected to strengthen the investment sentiment in E commerce and start-ups.”

The report also speaks about PE funding in the H1, 2018. It added, “In line with the trends in the last seven years, H1 2018 was also dominated by investments in the start-up sector, which contributed to 58 percent of total investment volumes garnering $1.8 billion. Fintech attracted significant attention from investors with 52 deals, followed by health-tech, retail and enterprise solutions segments.”

The prominent deals in the startup space were BigBasket raising its largest fund till date in its Series E funding worth $300 million, Swiggy raising its biggest ever funding round with $100 million as part of its Series F funding and obtaining Unicorn status, Udaan raising $50 million, which is one of the largest Series B funding rounds raised by any Indian startup, and Pepperfry garnering $39 million, which was the highest amount of capital raised by an ecommerce furniture and home products company in India till date.

While ranking the sectors for PE funding in terms of deal value, startups again topped the charts, contributing 19 percent of the total PE funding amounting to a total of 236 number of deals leading to $1,756 million of deal value.

Speaking about the PE funding, Vrinda Mathur, Partner, Grant Thornton India LLP, said, “Contrary to H1 2017, real estate, startup and energy sectors attracted the largest share of PE investments in H1 2018, together contributing 56 percent of investment values. Investors have shown an unprecedented faith in startups, resulting in Paytm Mall, Swiggy and PolicyBazaar entering the unicorn club. Owing to this, the startup sector investment values doubled compared to H1 2017.”

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